International Expansion for SaaS: Insights from SaaSiest Founders Daniel Nackovski and Thomas Sjöberg

In today's interconnected world, expanding into international markets is no longer just an option for ambitious businesses—it's increasingly becoming a necessity. However, the path to successful global expansion is filled with challenges that require careful navigation, from cultural adaptations to localization strategies. In this article, we explore the intricacies of international expansion, drawing on expert insights from Daniel Nackovski and Thomas Sjöberg, co-founders of SaaSiest, a B2B SaaS community designed to bring European SaaS businesses together.

The European SaaS Landscape: Breaking Away from US-Centric Models

The Software as a Service (SaaS) industry has traditionally been dominated by American perspectives and strategies. However, the European market presents unique characteristics that demand tailored approaches.

European SaaS companies face distinct challenges compared to their American counterparts. The first difference is the sheer size of the addressable market. A US company that is solely focusing on its own market still operates in a market that is much bigger compared to even the biggest European markets, such as Germany or France, considered on their own. "We need to think international from the get-go," Thomas emphasizes. "It's not enough to be number one in Sweden or number one in Belgium." But if we consider Europe as a network of interconnected markets, the outlook is very different. This, however, is easier said than done due to the continent’s diversity, which creates a complex environment that can't be navigated using a one-size-fits-all strategy, especially not one that is primarily designed to work in the US.

While Europe is governed by common laws, there are still significant regulatory differences between one country and its neighbours, not to mention linguistic and cultural differences, which make market research and analysis essential when evaluating expansion in a new market.

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Building Communities for European SaaS Companies

To address these unique challenges, specialized communities like SaaSiest have emerged, with the specific goal of supporting European SaaS businesses through their expansion journey. These communities provide valuable platforms for knowledge sharing among peers facing similar challenges, networking opportunities with potential partners and clients, and access to region-specific insights and strategies.

SaaSiest hosts flagship events in cities like Malmö, attracting over 1,200 participants and facilitating Europe's largest B2B SaaS networks with more than 230 online meetings annually. As Daniel explains, "Our mission is bringing people together to share battle stories with each other: real success stories, real failures, real pain points. People learn best from the people who are in the trenches." And judging by the overwhelming response to their events and initiatives in the SaaS world, their hands-on approach is certainly working.

Strategic Approaches to International Expansion and Global Success

When considering international expansion, businesses must develop thoughtful strategies based on solid criteria to achieve global success. Here's how to approach this critical decision-making process:

Identifying the Right Markets for Expansion

The first step in international expansion is determining which markets to enter. This decision should be guided by several key factors, including cultural and linguistic similarities, economic considerations, and legal and regulatory frameworks.

For Nordic companies, this often means expanding first into other Nordic countries before moving on to Benelux and the UK, all regions where English is either the native language or where English proficiency is high. However, he cautions that this approach may not apply to all companies and greatly depends on the kind of customer you’re trying to attract. If, for example, you're selling an enterprise solution that is targeted to the largest companies in Europe, you should not try and enter the markets that offer the least resistance from the cultural or linguistic point of view, but rather the markets where there’s a significant number of companies that could fit your ICP.

Thomas adds that certain products may be more suited to specific markets due to factors like process-related requirements or legislation. Germany, for example, tends to have very strict regulations, so it’s a great market for solutions that aim at simplifying the implementation of complex legal requirements for the end users.

Timing Your Market Entry

Another element that can significantly impact the success rate of international expansion is timing. Companies should consider market readiness, internal readiness, and competitive positioning when deciding when to enter a new market.

When it comes to market readiness, it’s important to analyse if the market in question has a level of maturity that justifies the effort and investment required to enter it. If your product offers a brilliant solution to something that is not perceived as a pain point in the target market, the chances of winning over a significant portion of the market will be lower.

A similar evaluation has to be carried out within the company to ensure the expansion aligns with its wider objectives and all internal stakeholders are behind the expansion. As The Growth Syndicate’s co-founder Clément Dumont recently told us, the decision to expand internationally requires a company-wide effort, and it shouldn’t be taken lightly. 

Finally, companies need to assess the competitive landscape in the specific market. This involves identifying competitors that have already entered the market and estimating what portion of the total addressable market can be won, and how.

Adapting Products and Messaging for International Markets

Successful international expansion requires more than just translating your website. It demands thoughtful adaptation of both your product and messaging to ensure global success.

Product Localization Strategies

Product localization goes beyond translation to ensure your offering resonates with local users. It involves adapting your product to meet the specific needs, preferences, and expectations of each target market.

Daniel emphasizes that the importance of localizing user interfaces for core markets goes way beyond the ability to be understood. "I think today it's a no-brainer. You need to have a localized UI for your core markets. Everybody speaks English today, but it doesn't matter. People are more comfortable in their own language." Localizing your user interface is about proving to your customers that their comfort is a priority for you and that they can trust you as a partner.

In addition to language, product localization should consider cultural nuances, such as color preferences, visual styles, and user experience expectations. For example, while a minimalist design may appeal to users in one market, another market may prefer a more vibrant and colorful interface.

Localization also extends to features and functionality. By assessing which features of the product are most relevant for each specific market and prioritizing those as a way to spearhead into the market, companies can create products that truly resonate with local users.

Adapting pricing models, payment methods, and subscription plans to align with local preferences and economic realities is another crucial aspect of product localization. What works in one market may not be feasible or attractive in another. As Daniel points out, "Just because somebody loves your product in country A and is willing to pay €5,000 for it, it might be that people will also love it in country B, but maybe in country B they're not willing to pay €5,000. Maybe you can only charge €1,000 or €2,000 a month for this product, and that might disqualify the market." As Ayon Bhattacharyya, founder and CEO of Biz Growth Spurt recently shared with us, willingness to pay can vary significantly from one market to another and it’s important to take this element into account not only at the pricing stage, but also much earlier, when assessing the viability of the expansion in that specific market.

Ultimately, successful product localization requires a deep understanding of each target market's unique characteristics, coupled with a willingness to adapt and customize your offering accordingly. By investing in thorough market research and working closely with local partners and customers, companies can create products that not only meet local needs but also exceed expectations, driving global success.

Messaging Adaptation: Balancing Global Consistency with Local Relevance

One of the greatest challenges in international expansion is maintaining a consistent brand while adapting messaging for local relevance.

The key is to find a balance, with a strong core message that allows for cultural adaptation. You need to find a way to preserve a strong and unified core message while being able to tweak some elements to give your product a local flavour.

To achieve this balance, companies must first identify the non-negotiable elements of their brand identity—the core values, mission, and unique value proposition that define them. These elements should remain consistent across all markets, serving as the foundation for all messaging and communications.

Next, companies should develop a deep understanding of each target market's cultural nuances, communication preferences, and local context. This knowledge should inform how the core message is adapted and delivered in each market.

For example, while a direct, assertive communication style may be effective in one market, a more subtle, indirect approach may be preferred in another. Similarly, humor and cultural references that resonate in one market may fall flat or even offend in another.

To navigate these nuances effectively, companies should work closely with local experts, such as marketing and PR agencies, who can provide valuable insights and guidance on culturally appropriate messaging. These partners can help ensure that the adapted messaging remains true to the brand's core identity while resonating with local audiences.

It's also essential to establish clear brand guidelines that allow for cultural flexibility while maintaining overall consistency. These guidelines should define the key elements of the brand identity, such as logo usage, color palettes, and tone of voice, while providing guidance on how these elements can be adapted for local markets.

Finally, companies should implement rigorous review and approval processes to ensure that all localized content aligns with the brand's core identity and values. This may involve collaboration between global and local teams to strike the right balance between consistency and relevance.

By carefully balancing global consistency with local relevance, companies can create messaging that resonates with audiences around the world while maintaining a strong, unified brand identity. This approach is essential for building trust, credibility, and lasting relationships with customers in each market, ultimately driving global success.

The Power of Local Partnerships

Entering new markets without local knowledge can be risky. Strategic partnerships can accelerate market entry and increase chances of success. Thomas notes that partners can be particularly beneficial for products that require more hands-on implementation or support, and they can open up an additional sales channel.

Daniel adds that partners can also help with credibility and authority when entering a new market:

Another vocal supporter of local partnerships is Nicoletta Dorizzi, who told us that her company, Inriver, often co-creates content tailored to specific markets in collaboration with local thought leaders.  

All of the above goes to show that local partnerships are a key component of achieving global success, as they provide invaluable market insights, cultural understanding, and established networks that can help companies navigate the complexities of international expansion.

Managing Internal Alignment During International Expansion for SaaS

International expansion affects every department within an organization, and maintaining internal alignment is crucial for success. Daniel warns against treating expansion as an experiment without full company buy-in. The decision to enter a new market cannot be approached half-heartedly, appointing one salesperson in the region, equipping them with some material, and sending them to one event to see what happens. There has to be a full strategy behind the expansion.

The importance of involving every department of the company in the expansion strategy had already been highlighted by Sendcloud’s Ashley Herbert Popa in a recent blog post, in which she described entering a new market as a collaborative effort involving multiple teams across the organization, from product development to marketing, from sales to customer support.

Thomas adds that founder presence is also important for maintaining cultural alignment:

Conclusion: Building a Truly Global Business

International expansion represents both a significant challenge and an enormous opportunity. Companies that approach global markets with cultural sensitivity, strategic partnerships, and appropriate resources can achieve sustainable growth beyond their domestic boundaries and attain global success.

The most successful global businesses maintain a delicate balance, preserving their core identity while embracing local adaptation. They recognize that international expansion is not merely a growth tactic but a profound transformation that affects every aspect of the organization.

By learning from the experiences of others, developing thoughtful strategies, and remaining flexible in implementation, businesses can navigate the complexities of international markets and build truly global enterprises that resonate with customers around the world. That’s why B2B SaaS communities have such an important role in the industry, as they allow founders to network and share knowledge, drawing from their peers’ experience to try and learn from their successes and avoid their mistakes. This is especially true for communities such as SaaSiest that are focusing specifically on the European context.

When it comes to international expansion, many SaaS companies feel like they are venturing into uncharted territory. And, in a way, that might be true. But leveraging the experience of other businesses and partnering with a localization provider like Undertow, who understands the unique challenges B2B SaaS face when expanding across borders, companies can approach this strategic journey with confidence. Get in touch if you want to find out more about how we create tailored localization programs for B2B SaaS companies so they can grow internationally.